BY FIDELITY MHLANGA
LISTED diversified packaging manufacturer, Nampak Zimbabwe Limited volumes plunged by 48% due to continuing contraction in consumer demand in the beverage sector.
In a trading update for the third quarter period to June , the company’s group managing director John Van Gend said at Hunyani Paper and Packaging, volumes were down by 36% for the quarter and 31% for the nine months compared to the prior year.
“The decline in the export market was some 56%, still largely due to competition in the regional tobacco case market. Volumes in the commercial segment were 13% below the prior year nine-month period, affected in the third quarter by depressed demand due to the COVID-19 lockdown restrictions,” Van Gend said.
Mega Pak volumes declined by 12% in the quarter and 25% for the nine months, attributed to continuing contraction in consumer demand in the beverage sector.
The company said there was a partial recovery in the third quarter due to higher demand for preforms and closures driven by indirect exports.
The CarnaudMetalbox unit saw volumes plunging by 48% and 36%, for the quarter and the nine months.
“HDPE sales volumes continue to be affected by the decline in the scud and mahewu container offtake. The metals volumes are being impacted negatively by the shortage of tinplate,” Van Gend said.
Revenue for the third quarter was 522% ahead of prior year quarter in historical terms.
The company said, while the economy continued to suffer from the scarcity of foreign currency, the introduction of the foreign exchange auction system has improved availability of United States dollars at the official exchange rate.
“The shortage of sufficient foreign currency for importing raw materials remained the Group’s main concern, especially in respect of paper for conversion into corrugated boxes for the commercial and tobacco sectors,” Van Gend said.
He said inflation is seen rising against the value depreciation of the Zimbabwe Dollar adding that fuel shortages, which eased towards the end of the previous quarter, appear to be resurfacing.
Power supplies were steadier, which have assisted production schedules.
“Volume reduction continued across all sectors of the business and margins were squeezed due to competition in the market. However, demand remained positive across most product portfolios and all units traded profitably,” he said.
On the outlook Van Gend said: “The full effects of the COVID-19 virus on the economy remain to be seen. The negative impact of restricted travelling both internally and externally, closed businesses and reduced consumer demand, where incomes do not keep pace with inflation, are problems to which the business will have to adjust. The unstable macro-economic difficulties are unlikely to be overcome in the short to medium term; however, the group
remains confident of continuing sustainability.”